Non-delivery and non-payment scams top the charts in holiday fraud

Emma McGowan 28 Nov 2023

It’s not just the busiest shopping season. For scammers and fraudsters, it’s easily the busiest scamming season, too.

I think very few people have the prowess for gifting like my partner. They’re in an elite group. Like, if thinking of and procuring the perfect gift were a competitive sport, they’d be recruited by Mercedes-AMG or the L.A. Lakers. 

For them, and people like them, the holidays are the championship season. The whole year has been leading to this moment. There’s an extended network of family, friends, and colleagues spread out across the nation. There’s a ton of shopping to do, and we’ve gotta win this game without breaking the bank.  

To the internet! 

Be aware: the hunt for the ultimate deal can be a perilous path 

If you’re an elite online shopper, you know there are deals to be found beyond the major online retailers. Niche websites and digital auction/trading marketplaces hold the promise of finding the perfect gift at dramatic discounts. Why would anyone hesitate to take advantage of the opportunities to save big? 

One good reason is that scammers and fraudsters are major-league shoppers too. They know the hot items in demand. They know what a great price looks like. They know which websites have policies that they can exploit, and they know how to use social engineering to tempt buyers to sidestep safety measures.  

Another good reason to hesitate? The FBI reports that this is the season when scammers are at their boldest and most creative. According to their 2022 Crime Report, the holidays are peak time for non-delivery and non-payment scams on the internet, costing consumers a reported $337 million in 2021. 

Non-delivery: Steve and the sketchy website  

If you’re reading this, we don’t expect you would do what Steve did. He browsed the internet and found a website offering the laptop he’s gifting to himself for half the regular cost. He dismissed all the red flags: the image of the laptop looked weird, the website design felt strange, and the web address didn’t have https:// at the front. Yet, he entered his credit card information and hit “buy.” 

Steve’s credit card was charged, yet the laptop never arrived (non-delivery). When he went back to the website, it no longer existed. The site, and the deal, were never real, and the scammers now have his money as well as his credit card information. Poor Steve. 

Now that we’ve got a simple example out of the way, let’s look at some more advanced techniques that scammers employ. 

Mike and the missed mic: sidestepping protection on auction sites 

Imagine Mike, whose daughter is nearing the end of her teen years and has shown both ability and passion for singing and songwriting. The perfect gift this holiday, he decides, is a high-end microphone designed for vocalists. A little searching and a little reading reveal a great mic for her, but it’s unexpectedly expensive. 

Mike decides to jump onto an online auction site, and there it is—a new in-box mic with a current bid $300 below the retail price. The seller doesn’t have much of a transaction history on this marketplace, but the listing explains everything. The seller got the mic as a gift and they don’t need it. Mike puts in a bid and hopes for the best. 

The next day, unfortunately, the auction ends for a much higher price than Mike’s bid (higher, in fact, than the regular retail price). But there’s hope! Shortly after the item closed, Mike got an email from the seller explaining that the person who won the auction backed out.  

Instead of relisting the item, the seller is offering the item to Mike directly for the same price as his bid. But, as the seller explains, it’s a better deal because now the seller doesn’t have to pay the auction-site fees and Mike doesn’t have to worry about being outbid again. All Mike needs to do is pay the seller directly via a cash transaction app instead of using the auction website payment system. 

Tragically, Mike sends the money, as well as his mailing address, to the scammer. The item never arrives, the seller’s account on the auction website is deleted, and the app Mike used to send the money offers no buyer or seller protection. Mike’s money is gone. 

What happened? In this scenario, the scammer took time to create a convincing listing for an expensive and in-demand item. They drew bids from people like Mike by starting the auction price well below retail. In the auction's final minutes, the scammer used a different account to over-bid for the item, making the fraudster both the buyer and the seller. 

Finally, the scammer contacted Mike through his bid history on the website. After they had him hooked, they deleted the official listing, took his money, and got away clean.  

Mara’s mislabeled marketplace scammer 

Mara knew the perfect item for her bestie: a vintage pair of sneaks from her favorite brand. She looked all over to find them at an affordable price, finally discovering the perfect pair listed on a social website that features an informal marketplace. 

Mara reached out to the seller to find out if the shoes were still available—and they were. After chatting back and forth about their condition, negotiating on the price, and settling on how to pay, they had a tentative deal. 

Mara would pay the seller through a reputable money transfer site that provides protection to buyers and sellers. When she paid, she would list the payment under goods and services, meaning her money would be held in escrow until the seller shipped the item. That’s the pro move, Mara. 

After entering the payment, Mara saw an email in her inbox with the subject line “Your shipping label has been created.” The next day, she glanced another email with the subject “Your item has been shipped.” Trusting the email and the process, Mara didn’t read the update very carefully. 

Since the item was marked shipped, the money Mara paid was released to the seller. Now she only needed to wait for the package to arrive. Then it happened. 

A few days later, Mara received a new email from the shipping company with the subject line “Delivery Exception.” 

Opening the email, the scam became clear. The shipping label (that Mara hadn’t checked closely) had the wrong name and the wrong house number. When the item was shipped, the seller marked that a signature was required, or the package had to be returned. 

Mara’s money, and the item (if it was ever real) went back to the seller, or scammer. This is a complex non-delivery scam that can more easily be avoided by ensuring the payment terms are always clear and checking shipping information carefully. 

Remember that the holiday shopping season means both real deals and fraudsters will be out in full force. You can potentially save yourself a little heartache by exercising caution and healthy skepticism. Keep these cases of non-delivery scams in mind, and share them with your favorite professional gifter before jumping online to find the perfect deal. Happy hunting! 

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